UK Stagflation Worsens, As Unemployment "Unexpectedly" Rises

Surging inflation? Check. Negative GDP growth? Check. Increasing unemployment? Check. Dropping wages? Check. Looks like we have a stagflation bingo. Per Bloomberg: "U.K. unemployment claims unexpectedly rose in January, underlining the fragility of the labor market a year after the economy emerged from recession and as public spending cuts start in earnest. The number of people receiving unemployment benefits rose 2,400 to 1.46 million, the Office for National Statistics in London said today. The median of 25 forecasts in a Bloomberg News survey was for a 3,000 drop. Unemployment based on International Labour Organization methods rose by 44,000 in the fourth quarter to 2.49 million." And this is just the start of what real austerity means: "Prime Minister David Cameron is counting on hiring at private companies as his government embarks on budget cuts that will cost 330,000 public-sector jobs over the next four years." And more economic humor: "There is a risk unemployment could rise” this year, Philip Shaw, an economist at Investec Securities in London, said before today’s report. “It’s possible that the public-sector job cuts happen straight away and you don’t see a pickup in private-sector job creation.”" Coming soon to every centrally planned regime near you.

Employment fell by 68,000 to 29.1 million in the fourth quarter from the third, the statistics office said. Part-time work accounted for all of the increase in employment over the past year.

The ILO unemployment rate rose to 7.9 percent in the fourth quarter from 7.7 percent in the previous three months, the statistics office said. That compares with 10 percent in the euro region, 9 percent in the U.S. and 4.9 percent in Japan. The level of unemployment was 6,000 lower than in the September- November period.

Average weekly earnings growth including bonuses slowed to 1.8 percent in the fourth quarter from 2.1 percent in September through November. Basic pay growth was unchanged at 2.3 percent.

Consumer-price inflation quickened to a 26-month high of 4 percent in January, twice the central bank’s 2 percent target, the statistics office said yesterday. Retail-price inflation, the benchmark for most U.K. deals, accelerated to 5.1 percent.

A third of the total unemployed had been out of work for more than 12 months, the figures showed. Joblessness among 16- 24-year-olds reached 965,000 in the fourth quarter, or 20.5 percent. Both measures were the highest since comparable records began in 1992.

And here's how their central bankers justify stagflation:

King, presenting the central bank’s quarterly forecasts today, said he
saw no evidence of a pickup in wage growth as he defended his view that
the surge in inflation will prove temporary.

Memorize this line: it will be used by the Generalissimo in a Congressional hearing within 3-6 months.

Which means all the socialists' wet dream of "taxing the rich!!!eleventyone11" would lead to a required tax hike of nearly 100%, swiftly followed by private employment collapse and state socialism.

It's also worth keeping in mind that public spending as part of GDP is at a massively unhealthy 53%. Yes, 53%. And that doesn't count massive un(der)funded public sector pension liabilities, which exploded under Gordon Brown.

If I was rich (I AM NOT) I'd rather pay 100% in taxes than be dead. But I'm NOTrich so I don't know what it would be like, I'm just assuming. Just to reiterate, I am quite poor. I'd be scared shitless if I was rich. (I'm not)

the UK like the US is being totally fuked over (robbed) by The Parasite Club... politicians, bwankers and parasite businessmen... the establishment have a vice like grip and will drag everything and everybody down the sewer with them... better 'out' than 'in'... I eloped to the Med' area over 4 months ago

What you just wrote, EscapeKey, is why "taxing the rich" schemes never work. The revenue generated always "unexpectedly" is less than planned because the rich will just say "screw it". They won't expand their business. They sure as hell won't hire any new employees.

And on top of that, they would send their income to the tax free lands. Still i don't think the good solution is to let them keep their money and rule the politics. State would have to run the bussiness, which is bad as before anyway.

If the money actually went towards what they say it does there'd be no problem, but instead it gets ciphoned off into organisations like common purpose that are destroying the country, people in charge of spending the money are members of these evil clubs alongside business leaders. So they give them contracts at ridiculously high prices, this is blatant but nobody seems to care. The NHS was caught buying cheap tacky soap for £1.50 a bar of some business they are well connected with.

There is also a giant quasi-governmental bureaucracy that controls every aspect of our lives, takes it's orders from charities and foundations funded by the banks but gets it's massive funding from the state which has no influnce over it. The "third way" they call it, Obama has mentioned it a few times so beware.

no it's called socialism.... Britain is a totally debilitated 80 year old socialist shit-hole where the State now robs some 60% of GDP...... the 3 pitiful Parties are Marxists or Socialists thru and thru with the State fuking up every part of the bled dry economy.... it's pure common-sense, a lesson in every history book ever written: bankrupted by State socialism

You're pretty inaccurate in your asumptions. Whose socialist and whose marxist? From what i know it's noecon's (cons.) with their lib-dem. lapdogs and mild neolib's (labour). The City is owned by bankers and the friends in politics. I don't see a frickin' piece of socialism besides NHS. Do you know where all the money went...well it's not to the people so guess again. (pshhh: Iraq, Afghanistan, bailing out bitchez, offshore accounts)

said he saw no evidence of a pickup in wage growth as he defended his view that the surge in inflation will prove temporary.

Memorize this line: it will be used by the Generalissimo in a Congressional hearing within 3-6 months.

Precisely, it also goes well in line with Keynesyan premise that inflation comes mostly through growth in wages or there could be no inflation if wages aren't rising. Shows real predicate of central banks policies: redistribution of wealth from bottom to top through inflation.

"But the strength of the recovery is likely to be dampened by the fiscal consolidation and a continuing squeeze on households' purchasing power from the effects of higher commodity prices and a persistent impact of the recession on productivity and hence wages."

The UK economy has two big millstones around its neck : A still inflated real estate sector tied into excessive mortgages that could plunge if interests rates went up, a huge security asset based pension plan scheme that could implode if the current security assets levitation bellied up seriously. Although the UK banking sector is not entrapped in current EU sovereign debt, it has these millstones that weigh it down potentially. If the current austerity plan is compounded by commodity inflation and interest hikes to counter that spiral...all hell breaks loose in the UK!

i disagree... the UK has an 'oversupply' situation not because it's short on stock but because there's no buyers and too many sellers... it effectively amounts to the same thing with the same result, collapsing prices to chase those few buyers... Uk property has the same grisly future as US property, a 90% collapse in values from their 2006-07 peaks

EscapeKey - i'm not disagreeing with your view of the stock situation. What I am saying quite simply is a market consists of a buyer and a seller whatever the stock situation. If you have too many sellers and not enough buyers (see both UK and US markets) you have the same situation, either stalemate or the sellers have to drop their pants (prices). The stock situation is irrelevant, but the effect of too many sellers to buyers is not

The succesful sellers will still need to find somewhere else to live, out of the same housing stock. If this housing stock is significantly larger than requirements, this will lead to a faster reduction in price/rent. But with a limited housing stock, so far what we've seen is an increase in rent paid as the housing market has gone down, which makes buy-to-let a more attractive proposal which will help stabilise the prices.

Anyway, and purely anecdotally of course, a friend of mine put up his (empty) rental property for sale last summer. Sat around for ages without an offer. Cut the price, accepted an offer, only then to spend the next 6 months waiting for the chain to move. The sale finally collapsed, and he put it up for rent, which had increased by 15% since he originally put it up for sale.

My sister works in an estate agents, she tells me it's not impossible to sell a house if you're willing to lower the asking price quite significantly. But she also tells me there's a strong sense that another housing price crash is heading our way, once the buyers wake up to this fact it will only make the crash worse.

There is plenty of housing in the UK. There is not plenty of afforable housing however. The reason there is not plenty of affordable housing is because the housing is all overpriced. Why is it overpriced? Because if it falls in price people will have no money to buy things!

The UK housing market is a Ponzi scheme, buy a house, it cannot go down in value, you can refinance and then buy a car, which will benefit the economy, despite the fact it is probably from Germany, which in turn moves the housing market up and so on and so on.

We already have a system to take peoples' money and houses if they have assets to pay for nursing home care. It is very just that peoole with property and money be required to spend it on their care before asking taxpayers for money. However in practice it is only a tax on stupidity and ignorance. Revocable living trusts and asset transfers will safely get your assets to your descendents. The only people i see losing their homes and property to nursing home care are the people who dont plan.

Of course, it's rubbish. £billions to the EU, 'sold off our industry to foreigners, too many immigrants from the EU and elsewhere and not enough jobs. Why? - Too much tax and bureaucracy with high overheads and increasing employment regulations and benefits off the top line. Its impossible to consider starting up without democratic mandates from the sheeple and with regulation and tax uncertainty. Up with Nigel Farage I say.

I posted this on another thread before I saw this one - but is valid for here....

The financial terrorism that is afoot is based on the weak will of the general populace in multiple western countries, predominantly the USA and UK. However, due to fundamental value changes in the population of these countries, unlike previous severe depressions, the point at which people can no longer afford to eat or pay for satellite tv / broadband / computers / consoles / drugs will result in mayhem rather than organised compliance.

As yet the risk / reward of disobediance is not sufficient, but is growing, and the first sign of where things are about to head (for the UK) will be the Trades Union Congress March on Saturday 26th March in London... be sure to tune in that day for some interesting scenes...

With respect, it is the likes of the TUC, Labour Party fundraisers, and daft employment demands and regulations on top of anti-business EU regulations and red tape that makes it impossible to start up and employ people. Why was Jaguar, Rolls Royce cars, Land Rover, Rover et al sold off? Why weren't they profitable beforehand? What really makes the playing field uneven is that to compete with the big boys one needs to borrow money instead of building the business from profits before tax and overheads. Companies are paying rent and salery from credit cards FFS.

There can be no return to employment or profit in this scenario. Government and Trade Unions have to back off. Period.

Hello Herman, I wont diasagree with you, my point was simply to state that it will be worth watching that protest march to gauge the level of general anger in the UK general working and no job populace..

Personally I am all for a system along the lines of what you allude to and I have directly experienced the issues you are talking about..

The problems faced will not be solved by the current government nor main oposition nor public sector officialdom, nor the unions... largely due to the fact that their ideology and / or existing status / lifestyle precludes them from it.

The UK may indeed be heading for.serious readjustments. Their total debt levels, public and banking, put them fourth right after iceland, ireland, and switzerland. Anyone want to hazard a guess where the USA is on the total debt to gdp ratio of the top 15 countries?

You can see the rot everywhere in the UK, even the airlines like Easyjet, Ryanair etc are offering less than sulubrious terms and conditions, charging pilots to fund there own training on the line, cutting down on benefits, it's still a good way to earn a living but the bankers have ruined everything, the rot and cancer stemming from canary wharf is a blight on the nation. London is no longer part of the UK in my book, it's nothing but an elite banker wanker stronghold.